Jan 11, 2013, 06.22 PM | Source: Moneycontrol.com
Aditya Birla Money is bullish on IndusInd Bank and has recommended accumulate rating on the stock with a target of Rs 461 in its January 11, 2013 research report.
, Aditya Birla Money |
“IndusInd Bank, net profit for the current quarter increased 29.8% YoY (6.8% QoQ) to Rs2672.7 mn. The growth in PAT was mainly driven by 34.2% YoY (13.4% QoQ) increase in the NII and 34.2% YoY (11.0% QoQ) increase in other income. Within other income, core fee income grew at a healthy 32% YoY (11% QoQ) during the quarter. The growth in profitability was despite surge in one-off provision for bad assets related to Deccan chronicle (~40% of its total exposure of Rs1 bn). The growth in NII was mainly driven by robust growth in advance book (30.8% YoY, 7.6% QoQ) and higher NIMs. C/I ratio during the quarter stood at 49.4% (decline of 38 bps YoY and 1 bps sequentially).”
“Net Interest Margins (reported) during the quarter improved by 21 bps both on YoY and QoQ basis to 3.46% on the back of higher decline in cost of funds as compared to yield on assets. The total cost of funds registered a decline of ~26 bps sequentially as against ~5 bps decline in yield on assets. Cost of deposits declined by 25 bps sequentially on the back of repricing of high cost of deposits, while Yield on Asset declined 22 bps due to interest reversal on Deccan Chronicle account (~Rs45 mn) & various festive related discounts during Q3FY13. The management expects the cost of funds to come down in the coming quarters which will aide in margin expansion. We expect the bank’s NIM to increase by ~12 bps to 3.6% in FY13E. Total business of the bank registered a robust growth of ~28.1% YoY (7.3% QoQ) as of Q3FY13. Deposits grew by 26.0% YoY (7.0% QoQ), whereas Net Advances grew by 30.8% YoY (7.6% QoQ). The advance book grew on the back of healthy 38.2% YoY (6.2% QoQ) growth in the retail book, while corporate advances book grew by modest 23.9% YoY (9.2% QoQ). Corporate advance book share in total advances has shown increase during Q3FY13 to 48.9% from 48.2% QoQ, after consistent decline for past many quarters. CASA during the quarter increased by ~70 bps sequentially from 28.0% in Q2FY13 to 28.7% in the current quarter. The bank is adding new branches, recruiting more workforce, introducing new products and also exploring new segments (such as government business) to boost CASA going forward. The management guided for loan book growth of 25%-30% for FY13.”
“The bank continues to show impressive performance on the operating front despite challenging times. We estimate Indusind Bank to report an EPS CAGR of 27.3% over FY12-FY14E. ABV is estimated to grow at 30.2% CAGR during the same period. The bank has raised Rs20 bn through QIP in December 2012. We believe the bank’s valuation (at 2.6x its FY14E ABV) adequately factors in the strong fundamentals thus leaving limited room for upside. We roll our target price to December’13 revising our target price to Rs467.1 (Rs386.2 earlier) valuing the bank at 2.5x its FY14E ABV, implying an upside of 5.9% from current levels. Thus we retain our Accumulate rating on the stock,” says Aditya Birla Money research report.
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